But now there are limits on tons. The back-and-forth U.S. policies regarding imports of Canadian aluminum have made the “Midwest Premium” uncertain.
“The United States has made its peace gesture conditional on how much metal flows over the border in the last four months of this year. Too much and the tariffs come back.... These are unilateral quotas. Canada is clear that it hasn’t negotiated them.”Reuters (guest editorial), 9/17/2020
Source article (opens in new tab): U.S.-Canada truce but aluminium is ever more politicised: Andy Home
- The Trump administration began tariffs on imports of aluminum in May 2018, but Canada was granted an exemption. The exemption was rescinded, then granted again, then again rescinded in August 2020.
- Now, Canada’s non-alloyed, primary aluminum metal will not be tariffed for the remainder of 2020, but only if imports are kept below levels set by the U.S.
- The oscillating policy has changed the expected supply-demand balance for aluminum in the U.S.
Because the Midwest Premium (MWP) is directly affected by the cost to acquire and transport aluminum to the U.S., increased tariffs on imported material can cause MWP to rise. When the tariffs disappear, both the costs and MWP can retreat.